Thursday, November 18, 2004 - The Progress & Freedom Foundation Blog

A Word on the NARUC Resolutions...Milquetoast

On the heels of the FCC's Vonage decision, an association of state utility commissioners met, debated issues and passed 21 unique resolutions. Nine resolutions that emerged from the Telecommunications Committee were approved by NARUC before the meeting ended.

It is fair to say that I didn't linger too long at NARUC. In fact, if you discount time spent at the airport, I was in Nashville less than a day and only in the convention area for a few hours. Notwithstanding this limited experience, even I picked up on the heightened level of engagement generated by four resolutions brought to the table by veteran Maine PUC Chairman Tom Welch. Three of the resolutions were adopted and a fourth, on VoIP was tabled until the February meeting.

In a nutshell, NARUC's line in the sand against all federal preemption was significantly eroded and some old-line, "regulate the world based on a 1920's utility doctrine" regulators were seriously upset. So what did the resolutions actually say?

On the NARUC Telecommunication Policy Resolution, the new resolution calls for three changes:

1. "NARUC is open to the possibility that, as markets evolve and local products and services take on more national and international characteristics, traditional jurisdictional principles may need to be re-evaluated." Okay so far. But the fact that this was viewed as controversial says more about NARUC's starting point on these issues than the resolution itself. The resolution doesn't call for reevaluation of jurisdiction. Rather, it states an openness of mind to the possibility of reevaluation. How very noble.
2. At section 4.1, the amended resolution states "NARUC is willing to work with the FCC and telecommunications service providers to seek a simpler and competitively neutral system of intercarrier compensation." Another good idea; intercarrier compensation reform will necessarily entail state-federal cooperation. But why is NARUC elevated to the level of a sovereign? Am I the only one who thinks that perhaps it would be better if NARUC would pledge to encourage the several States to "work with the FCC and telecommunications service providers"? On one hand is an honest broker attempting to bring parties toward consensus. On the other, unfortunately where NARUC has placed itself, is an interest - like so many others - promoting itself for a seat at the table.
3. And at section 7.4, the amended resolution reserves to state authority the ability to regulate based on anticompetitive behavior (state regulation excepted,) universal service, public safety and welfare, quality of service, "consumer rights" and to ensure just and reasonable rates. Translation: We'll admit that maybe a situation exists where we should not regulate but we won't consider scaling back any of our current authority.

The amendment to the Telecommunications Policy Resolution on "national consistency" was much more clear. While it too has caveats, there is less of the bait-and-switch feel than in the above-mentioned amendment. In part, it reads "National preemption of State authority may be justified under some circumstances. Before preempting State jurisdiction, however, Congress and the FCC should consult with the States and U.S. territories..." It is a pretty straightforward and a darn newsworthy statement, considering the source.

Finally, a resolution on UNE pricing was adopted. The resolution acknowledges that UNEs set too low "may discourage investment in new infrastructure and services." Indeed it may. The resolution goes on to say, "NARUC is open to the possibility that unbundling should be treated as a transitional approach to opening markets, and that the goal should be, for most if not all areas, facilities-based competition." Again, NARUC is "open to the possibility" instead of simply stating a preference.

All in all, by any reasonable standard revolutionary statements were neither proposed nor adopted. (Not to say that Welch and his erstwhile supporters didn't have their hands full. Several announced to me that they simply wanted an acknowledgement from the group that their point of view existed. i.e. 'All states are not monolithic.') The NARUC amendments represent progress and should be seen as a step forward for a deeply wounded organization. Congratulations Tom.

posted by @ 4:02 PM | Communications , State Policy